Recently started earning over £100k, so now I earn LESS due to being taxed more

Recently start earning over £100k. A completely novice, I wasn’t aware of the 60% tax bracket. I only took on a second job because my husband isn’t well. And suddenly start earning LESS due to being taxed more. So I want some advice about claiming this back via making a (large) pension contribution. Do I literally transfer money to my pension (I have workplace Nest and personal Aviva) and then put the figures onto my tax return?

Hi Lucy,

Thanks for your question.

Sorry to hear your husband isn't very well.

We are entitled to earn £12,570 each year before we have to pay any Income Tax. When total earnings exceed £100,000, we begin to lose our personal allowance by £1 for every £2 over £100,000. Once earnings of £125,140 have been reached, the personal allowance will be lost completely.

As you have mentioned, making a personal pension contribution can help regain this personal allowance. This is called 'net adjusted income'. A pension contribution can be made to a personal pension, where 20% tax relief would be claimed automatically by the pension provider. To claim higher rate tax relief, would be via a self assessment tax return.

It's worth noting that there are limits to how much you can contribute to your pension. The annual allowance is currently £40,000 (rising to £60,000), but it may be lower for some people depending on their circumstances. For example, high earners and those who have already taken pension income flexibly.

If you are unsure, please get in touch and we can have a chat.

Hope this helps, best wishes.

Chloe